insurance policy

NOT A PENNY MORE…

Posted on February 15, 2023

NOT A PENNY MORE

Balance your insurance policy sums...

THE GAP BETWEEN PROPERTY rebuild costs and the amount buildings are currently insured for in the UK is widening.

It’s unlikely that reviewing the sums-insured on your insurance policy was top of the list for new year’s resolutions, but perhaps it should be!

It is likely that if you haven’t reviewed your sums insured for a while, you may find that you are under insured, in fact data shows that up to 83% of properties are underinsured and on average they’re only insured for 66% of what they should be!

A greater proportion of properties are now underinsured and the gap between property rebuild costs and the amount buildings are currently insured for in the UK is widening.

INSURANCE GAP
Latest research shows 83% of properties were found to be underinsured, up from 80% in 2021. On average, these buildings were insured for just 66% of what they should have been. The percentage last year was 68%, which shows how the buildings under-insurance gap is widening in the UK. This gap is biggest among buildings insured for up to £500,000, which are on average only covered for 51% of their rebuild cost.

Buildings insured for more than £2 million are closer to what they should be, but still only covered on average for 70% of reliable rebuild cost. But what is the effect of underinsurance? Well in the unfortunate event where you have an incident on your park where you need to make a claim, if you are found to be underinsured then your claim settlement may be reduced proportionally in line with the level of underinsurance.

This can happen if the reinstatement cost of the property is not adequately valued at the time the insurance policy is taken out, or if the reinstatement cost of the property increases over time and the policy is not updated to reflect this change. Common increases can include refurbishment of premises, additional buildings and increasing cost of materials to reinstate buildings.

Insurance policies are often index-linked which means the insurer will increase sums insured at renewal by a set percentage to take into account inflationary pressures, however if the initial sum insured is incorrect then all this does is prevent an underinsurance issue from getting worse.

LATEST RESEARCH shows 83% of properties were found to be underinsured.

RE-INSTATEMENT SUMS
The other point to bear in mind is that your insurance policy will contain a ‘buildings definition’ and any reinstatement building sum insured needs to take into account that definition. A standard building definition will take into account roads and paths and underground infrastructure and if this isn’t reflected in your building sum insured or catered for separately, as it is under the Park Protect Insurance policy, then you may find that you are underinsured in the event of an insured loss.

The onus is on the policyholder to ensure that these sums are correct, so how can you avoid this potentially costly issue? A professional valuation can help ensure that your holiday park is adequately insured. It is important to have an accurate valuation of your property and assets in order to determine the appropriate amount of insurance cover. The value of your property and assets may change over time, so it is important to review your insurance cover regularly to ensure that it remains adequate. Conversely, research shows overinsurance can also be an issue.

Research shows that 13% of buildings assessed were covered for too much this year, on average by 132%. So having a professional valuation could actually save you money. A specialist insurance broker can help you assess your insurance needs and find a policy that meets your specific requirements. They can also help you understand the terms and conditions of your policy and ensure that you are adequately covered. Park Protect provides tailor-made insurance for the specific needs of your business. Get in touch to find out more.

pib Group
Tel. 01422 358 525
www.pib-insurance.com/parkprotect

BEWARE THE SLIPS AND TRIPS

Posted on February 16, 2022

BEWARE THE SLIPS AND TRIPS

All you need to know about holiday park insurance…

 

WINTER IS TRADITIONALLY the time to check if your park and all its assets are properly protected against any eventuality.

 

As a holiday and caravan park owner or manager, the quieter winter season is often used as an opportunity to run annual maintenance checks and undertake refurbishment to interiors and exteriors where needed.
This is also a time when it is important to make sure that your park and all its assets are properly protected against any eventuality.
“Holiday park insurance can help you to identify what your park insurance needs are, and to make certain that these are provided for with a cost-effective policy,” says Dave Moffat, Director of Pib Group Insurance, the company behind the popular Park Protect scheme.
Whilst holiday parks present similar risk to many businesses there are significant differences. Holiday parks rely on the infrastructure on the park in the form of underground pipes and hook ups, access barriers, on site lighting etc and it is important that your insurance policy can cater for this.
“Many holiday parks will also have holiday home hire feet and holiday home stock,” advises Dave. “As such it is important that a parks insurance policy is able to cater for such units and also the debris removal and re-siting costs associated with replacing holiday homes. ”These are just two of many areas to consider when insuring holiday parks and it is important that your needs are professionally assessed.

 

 

REVENUE LOSS
In addition to recouping the actual financial cost of rebuilding or buying new holiday homes and buildings, it makes financial sense to obtain insurance which will provide you with a cover for the loss of revenue or profit incurred following a material loss.
It is important that you seek professional advice in this area to make sure the sum insured and indemnity period are sufficient for your business needs and the period your business could be affected following a serious loss, such as a fire or flood.
Pib offers common sense advice: “Having members of the public stay in your caravans and spend time in your park on a daily basis also exposes you to other financial risks.
“We live in an increasingly compensation-based culture, in which some people are willing to sue for the smallest things. Though some compensation claims may be for fatuous reasons, there are also very real risks within any holiday park that could result in injury or loss.”
One indemnity limit area holiday parks do need to consider is the limit of indemnity under this cover as the levels of very serious losses has increased exponentially in recent years and claims well in excess of £5m are no longer unusual. Crucially the limit of indemnity is set at the time of the incident but the ultimate settlement amount can fluctuate depending on the calculators used for such claims at the time of settlement. It is not possible to buy additional cover after the event and if your limit of indemnity is exhausted you would be responsible for the shortfall.
All businesses with employees are required to have Employers Liability Insurance arrangements, which usually has a £10,000,000 limit of indemnity. As with Public Liability, all Holiday Parks should consider higher limits of indemnity as it is no longer inconceivable that a very serious injury to an employee could exhaust this cover. The cost of arranging such Excess Liability cover is relatively small and should be discussed with a specialist Insurance provider.

 

Each holiday park will have different insurance needs, depending on size and a variety of other factors. A large-scale park with hundreds of caravans will have different policy requirements to that of a smaller family run park.
Insuring more than 200 caravan and holiday parks across the UK, Park Protect provides tailor-made insurance for the specific needs of your business.
Meanwhile, with all the signs pointing towards another bumper year for the industry what do Holiday Parks need to think about in relation to Insurance.
Compass Insurance have consistently raised awareness about the importance of being insured for the right amount, whether that’s parks themselves or their owners and their individual caravans and lodges. As the costs of rebuilding and replacing park buildings and in particular, caravans and lodges increases, this places more emphasis on sums insured being accurate.
For Parks this means making sure that any buildings and infrastructure insured on their policy is accurate and in some cases a valuation or survey is a good idea especially if you haven’t reviewed this for a few years.
Analysis at the end of 2021 showed that the cost of rebuilding and repairing damaged buildings had increased 7.9% in the last 12 months and forecasts show this continuing to increase as shortages of materials and labour continue into 2022. With that in mind we’re introducing a valuation service for parks insured with Compass so they can have the peace of mind that comes with a professional valuation for their sums insured.
For the owners of individual caravans on your park this can have greater significance as the current issues with supply of new and second-hand units means that what a customer insured for in good faith just six months ago may already be less than the cost of replacing that unit in today’s market.

 

 

IN GOOD FAITH
Compass always look at what the customer insured for at the point the policy was taken out or renewed and base our assessment of any claim on that value. In 2022 our policies will also be updated to contain a provision for this growing trend so that customers don’t find themselves underinsured for no fault of their own.
Compass are renowned for our market leading Holiday Caravan and Lodge product but in 2021 they invested time and resource in developing and launching more products that parks and their customers can benefit from.
Its Residential Park Home product underwent a major overhaul including the introduction of two tiers of cover (Essentials and Extra) which enable the customer to tailor it to meet their needs, as well as the addition of Home Emergency and Legal Expenses as optional covers.

 

 

TRAVEL INSURANCE
They have also developed and launched products for owners of Touring Caravans and Motorhomes both of which give market leading levels of cover at very competitive premiums.
Finally, and new for 2022, Compass is excited to be announcing the launch of its travel insurance product for customers who book breaks on Holiday Parks in the UK.
This product has been developed specifically to meet the growing demand for UK holidays and gives the customer a wide range of cover including cancellation, curtailment and emergency assistance and also includes cover for Covid19 related illness or restrictions.

Caravan Guard (Leisuredays)
Tel. 01422 396 693
Email. park-operator@leisuredays.co.uk
www.leisuredays.co.uk

Compass Insurance
Tel. 0344 274 3908
Email. enquiries@compass.co.uk
www.compassparks.co.uk

Pib Group (Park Protect)
Tel. 01422 358 525
Email. hello@pib-insurance.com
www.pib-insurance.com